Indian equity markets are anticipated to open cautiously on Monday amid a backdrop of negative news, including a forecast by the India Meteorological Department predicting monsoon rainfall at approximately 90% of the long-term average, ongoing US-Iran tensions, heavy selling by foreign portfolio investors (FPIs), and a reduction in India’s weightage due to the MSCI Rejig. Attention is now turning to the upcoming Reserve Bank of India (RBI) meeting set for Friday. Additionally, the US Bureau of Economic Analysis has revised its first-quarter GDP growth estimate downward to an annualized rate of 1.6%, from a previous forecast of 2.0%, signaling a slowdown in economic momentum.
Market volatility is expected to persist amid uncertainties surrounding a potential US-Iran deal and the reopening of the Strait of Hormuz (SoH). Emkay Global Research noted, “The focus is now shifting to the RBI MPC decision slated for June 5. The significant improvement in India’s external account outlook over the past two weeks, driven by a 22% correction in Brent crude prices on hopes of a US-Iran deal, diminishes the necessity for a rate hike. We anticipate the RBI will maintain its position next week, which bodes well for the consumption recovery narrative and the earnings cycle.”
As a signal of market conditions, the Gift Nifty at 23,725 suggests a flat opening. In global markets, Asian stocks have shown gains, with Korea’s Kospi rising nearly 4% and Taiwan’s market increasing by 2%.
Key Economic Data and RBI Policy in Focus
Factors to Watch
The upcoming week is expected to be particularly sensitive to macroeconomic developments, geopolitical news, and central bank statements, according to Ajit Mishra, Senior Vice President of Research at Religare Broking Ltd. Investors will be closely monitoring developments concerning the U.S.-Iran situation and fluctuations in crude oil prices, which are critical for inflation expectations, currency stability, and foreign investment flows. Domestically, Industrial Production (IIP) data for April 2026, set to be released on June 1, will be scrutinized for signs of manufacturing and economic momentum following recent slowdowns.
Furthermore, the final HSBC Manufacturing PMI reading for May will be published on Monday, with the Services PMI and Composite PMI data forthcoming on Wednesday. These metrics will provide essential insights into demand trends, business activity, and growth resilience across various sectors, according to Mishra.
Given the current economic landscape, the central bank is expected to adopt a cautious approach in light of a weakening rupee, rising bond yields, and inflationary pressures. Investors are also likely to pay close attention to India’s Q1 GDP growth data and foreign exchange reserve figures for a better understanding of economic health and external sector stability.
Geopolitical Developments to Drive Investor Sentiment
Ponmudi R, CEO of Enrich Money, emphasized that markets are likely to remain highly sensitive to geopolitical and macroeconomic issues in the forthcoming week, with investor focus primarily directed toward ongoing U.S.-Iran negotiations, broader diplomatic movements in the Middle East, and the trajectory of crude oil prices. While potential agreements have fostered an improved risk sentiment and caused a sharp decline in energy prices, investors remain guarded, as a definitive breakthrough has yet to materialize.
In this context, investor positioning is expected to remain both selective and cautious, with overall confidence dependent on meaningful progress on diplomatic fronts and continued stability across energy and currency markets.
Published on June 1, 2026
